EIB promises investment in renewable energy projects

ISLAMABAD - European Investment Bank (EIB) has assured the government that bank would analyse Pakistan’s overall renewable and hydro energy generation potential for possible future investment in the country.European Investment Bank Vice President Ms Magdalena Alverez Arza gave the assurance in a meeting with Finance Minister Senator Mohammad Ishaq Dar, who was accompanied by secretaries of Finance Division, Economic Affairs Division and Water and Power Division.Welcoming the Vice President EIB, finance minister said that present democratic government in Pakistan has developed a policy whereby local and overseas investors are fully protected, sovereign guarantees through well designed financial instruments are available and offer attractive returns to the overseas energy sector investors that can secure their investment related economic interests.Finance minister acknowledged the assistance of EIB on different projects especially Kheyal Khawar Project.Dar presented a snapshot of Pakistan’s economy to the Vice President EIB, stating that Pakistan has inherited a complex economic situation with macro-economic imbalances. The present government has focused its attention to the issues of economy, energy and extremism. Besides, it is fully geared towards increasing the existing 14000MW power potential up to 22,000MW in next four years in order to address country’s growing commercial and industrial sectors’ needs. In medium terms, the government believes in increasing country’s power generation potential up to 40,000MW in consideration of future energy-based needs in all sectors of development.The finance minister further briefed the Vice President EIB on Pakistan’s recently having undergone a successful review with IMF by completing all significant procedures, entitling release of third tranche to Pakistan under Extended Fund Facility.Pakistan actually has inherited a wrong energy mix which heavily is tilted in favour of expensive thermal power generation that needs to be reversed, Finance Minister emphasized.Ms Magdalena Alverez Arza, during the course of discussion, stated that her bank would support renewable energy projects in Pakistan since Pakistan has been blessed with tremendous opportunities in renewable power generation sector which needs to be fully tapped as it remains unexplored and underutilized. EIB is looking forward to Pakistan’s working on wind power projects to meet its enhanced energy needs. Moreover, EIB has a structured mandate to support power projects through capacity building of Pakistan’s relevant stakeholders, she assured the finance minister and his team.The Vice President EIB shared her bank’s views as to whether GOP would prefer to use same mode of financing as EIB currently is engaged in offering during the course of its energy related investment in Central Asian Republics. The finance minister stated that Pakistan has 90,000MW power generation capacity on Indus River cascading down to the plains of the country from its place of origin and this power generation potential can attract overseas investment. He took this opportunity to explain to Vice President EIB the salient features of proposed Diamer Bhasha Hydropower Project which has a predesigned feature of building a water reservoir that can support Pakistan’s power and water related needs if overseas investment also is packaged in it.The finance minister explained to the Vice President that the global commercial market and multilateral donors have expressed interest in offering structured investments in Pakistan.